HATCHING IDEAS UCF's technology incubator provides a growth environment for startups

If Orlando is ever going to become one of the nation's top biomedical hubs, it will need more people like Nilabh Chaudhary.

"Neil" Chaudhary, with a strong background in both business and molecular biology, may live in Cincinnati, but his heart and soul are in Orlando. He is co-founder and chief executive officer of an Orlando startup company, NeoCytex Biopharma Inc., and he needs all the help he can get.

"I'm a scientist. I know business, but not the nitty-gritty," said Chaudhary (pronounced CHOW-dree).

His 2-year-old company, co-founded with University of Central Florida molecular biologist Kiminobu Sugaya, is doing stem-cell research to develop ways to regenerate brain cells, which could offer significant help -- perhaps even a cure -- to people with Parkinson's or Alzheimer's.

Such breakthroughs are many years in the future, Chaudhary knows. For his company, "it's extremely high-risk and high-reward. We need support without having to lay out dollars for infrastructure, so we can put our money toward the critical science needed to move the project forward."

He's getting that support from UCF's technology incubator, part of the university's office of research and commercialization. NeoCytex is one of 46 current incubator clients, seven of which are in the life-sciences field.

The incubator's staff of seven UCF employees and two dozen or so community volunteers "hold your hand in the beginning," Chaudhary said. "They let you go when you're past that stage, then again when you need it."

The UCF technology incubator is doing a lot of hand-holding these days, with life-science companies its fastest-growing sector. Founded in 1999, the incubator didn't encounter its first life-science client until late 2001, when Harvard medical-school grad Philip Chen moved to Orlando and launched a medical-diagnostic startup.

Now among the incubator's most successful "graduate" companies, the Cognoscenti Health Institute has about 100 employees in Florida and is a unit of Sonic Healthcare USA. Cognoscenti had two employees when it was launched shortly before 9-11, and seven employees by the end of that year.

"I came straight out of academia," Chen recalled of the help he received as an incubator client. "I knew the technical part of running a bioscience company, but getting payroll, human resources, marketing -- they were instrumental in helping us make the right connections."

The incubator provides advice and consulting through its connections to UCF and the Central Florida business community. It also offers flexible office space at a subsidized price.

Steve Grimsley is chief technology officer for Welnia LLC, a wellness-software company that was in business for two years before joining the UCF incubator in 2005. The move gave Welnia, which specializes in chronic-disease management, sorely needed office space, access to advice, and even the ability to run a pilot program through a UCF wellness class.

But the biggest plus, Grimsley said, could be summed up in one word: networking. "You get access to people easily; you're connected to a network. When you're small, you don't [usually] have access to services."

Biomedical companies are a special challenge for an incubator, said Tom O'Neal, who oversees the program as UCF's associate vice president for research.

"A good software company can be in and out of here in 18 months," O'Neal said. "You can spend seven or eight years on a life-science company."

It took Cognoscenti just under six years to graduate, though it was profitable almost from the start. "To get to sustained profitability is the key," Chen said, "and for life-science companies, it takes longer."

But not always. Bill Christy, chief executive officer of AOI Medical Inc., spent two years in the UCF incubator before graduating last summer -- when his company netted $16.8 million in an initial public offering.

Christy, who ran four previous startups before founding AOI in June 2005, didn't need the hand-holding that Chen and Chaudhary did. But he did need the infrastructure and networking.

AOI Medical, which developed an innovative surgical treatment for elderly people with collapsed vertebrae, needed the ability to increase its office space as well as access to UCF laboratory space.

It also turned out that another UCF incubator client, Mydea Technologies, was a perfect match for AOI, which was turning out three-dimensional computer solutions that Mydea could quickly turn into physical models.

The incubator, Christy said, was "a vehicle to grow efficiently and economically."

AOI and Cognoscenti are among 27 companies that have graduated from the UCF incubator. All 27 are still in business, said O'Neal, who also noted that three-quarters of all UCF incubator clients are still in operation.

The typical technology-incubator client starts with a promising idea, he explained, but turning that idea into a money-making product or service is a bigger leap than many realize. "The research is the hard part, but that little bit at the end is hard, too, if you don't know how to do it."

The UCF technology incubator runs on an annual $1.6 million budget, about $700,000 of which comes from rent that client companies pay for the space they use in Central Florida Research Park, which is next door to the university in east Orange County.

UCF kicks in about $650,000 a year. Other major contributors include Orange County and the city of Orlando, which kick in $100,000 each.

"We have limited resources," O'Neal said in explaining how startups are selected for incubator status. "We're not looking for tire-kickers, or the faculty member looking for prestige who wants to go back to his friends and say, 'I've got a company.' "

But while trying to be selective, O'Neal acknowledged that the UCF incubator is still lacking in one of the most critical areas for biomedical startups: specialized laboratory facilities, widely referred to as "wet-lab" space.

There's some wet-lab space at UCF, but not nearly enough to satisfy the needs of life-science startups.

Neil Chaudhary, the NeoCytex executive, called the incubator's lack of wet-lab space a major problem.

"We've been hindered by not having ready access to labs," he said. "There's a lot of investor interest in us. They know we need to be generating more data, and we need more space. The faster we can have it, the faster we can grow."

John Fremstad, vice president of technology-industry development with the Metro Orlando Economic Development Commission, estimates that there is roughly 15,000 square feet of wet-lab space in all of Central Florida, equivalent to "one floor of a high-rise," he said. If Central Florida is to become a world-class biomedical cluster "in 25 instead of 50 years, we need a foot on the accelerator."

The heavy foot may belong to Rasesh Thakkar, the Tavistock Group executive leading the charge to establish a "medical city" in his company's Lake Nona development in southeast Orlando.

Thakkar announced plans Friday to build a 100,000-square-foot wet-lab facility in Lake Nona -- with a mid-2010 completion date -- near the UCF College of Medicine and the Burnham Institute for Medical Research.

"The saying is, 'If you build it, they will come.' If they don't, I will have serious egg on my face," said Thakkar, calling the planned facility both "a $50 million bet" and "a turbo-boost mechanism for the [biomedical] cluster."

Thakkar expects the bet to pay off and promises that, as soon as half of the wet-lab facility's space is leased, he will start work on a second one.

"My goal is that, when a [biomedical] company says it would like to locate in Central Florida or Orlando or Florida, I want to be able to tell them, 'You can move in tomorrow.' "

Such talk is music to the ears of Neil Chaudhary, though wet-lab space is just part of the equation for a biomedical startup such as NeoCytex. He figures a few more years and about $8 million in investments will get his company through phase 1 clinical trials and pique the interest of a big pharmaceutical company -- with a resulting payoff in excess of $100 million.

"When we get that deal, we don't need the incubator any more," Chaudhary said.

"The incubator," he explained, "helps young companies live through the valley of death -- when they can't raise money because the project is too risky, but they still need world-class support -- because without it, you're nothing."







CONTACT: Harry Wessel can be reached at hwessel@orlandosentinel.com or 407-420-5506.